FCA, via CP19/26, is proposing technical standards on the content and format of simple, transparent, and standardized (STS) notifications under the onshored Securitization Regulation. These UK-specific technical standards for Securitization Regulation are intended to prepare for the event that the UK leaves EU on October 31, 2019 without an implementation period and the relevant EU technical standards have not been brought into UK law as part of the EU Withdrawal Act. With this consultation, FCA seeks to ensure that it has adequate technical standards to support a well-functioning STS securitization market in UK and can effectively supervise firms’ compliance with the requirements of the EU Securitization Regulation, as amended by the Securitization (Amendment) (EU Exit) Regulations 2019 on the Exit day, assuming a no-deal Brexit. The consultation on these technical standards closes on August 27, 2019. FCA plans to publish final or near-final technical standards in a Policy Statement on or very near to the Exit day. FCA also intends to publish further consultations covering the remaining technical standards.
The proposed technical standards are consistent with the draft technical standards on STS notifications, which ESMA has previously consulted on in an EU context. The draft ESMA standards are laid out in the (July 2018) final report on the draft technical standards on STS Notification under the Regulation 2017/2402 and will be well-known to UK participants in the securitization market. The proposed technical standards contain cross-references to an EU instrument that is yet to be brought into UK law. Further amendments to the proposed technical standards may be required to appropriately deal with these cross-references. These proposals will be of interest to anyone involved in securitizations; this includes firms involved in securitization markets either as investors or manufacturers (originators, sponsors, or securitization special purpose entities) of securitizations; individuals holding offices or positions involving responsibility for taking management decisions at originators and sponsors; and third-party verifiers assessing compliance with STS criteria. The consultation paper introduces proposals and the accompanying draft instruments for the technical standards that
- Specify the information that originators and sponsors are required to provide to comply with the STS notification requirement
- Establish the templates to be used for the provision of the required information in the technical standards on STS notifications
While the EU Securitization Regulation has been in force since January 01, 2019, several subordinate EU technical standards clarifying the detailed obligations imposed on firms have been delayed. These are being finalized in stages over the coming months. If these standards become operative while the UK is still a member of EU, they will apply directly and will be brought into UK law on Exit day, as part of the Government’s European Union (Withdrawal) Act 2018 (EUWA). However, if they become operative after UK leaves EU, they fall outside the scope of the EUWA powers. This means that to have such technical standards in force in UK, FCA can make those standards under the powers on exit but must consult on them. This consultation paper prepares for that circumstance, consulting on the proposed UK technical standards.
Comment Due Date: August 27, 2019
Keywords: Europe, EU, UK, STS Securitization, CP19/26, Brexit, Banking, Securities, Implementing Technical Standards, Regulatory Technical Standards, Securitization Regulation, FCA
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